Many Americans planning for life after their working years are generally aware of some of the major tasks they ought to be taking care of on the road to retirement.
Personal finance bestselling author Dave Ramsey offers a few warnings about Medicare and Social Security, two federal programs with which people preparing to retire should familiarize themselves.
First, though, while they are still working, people should be taking advantage of an employer-sponsored 401(k) plan if one is availableĀ āĀ and, if possible, investing in an Individual Retirement Account (IRA).
Because the average monthly Social Security payment is less than $2,000, these savings and investment plans are important. Retiring on Social Security benefits alone is not enough for most people’s idea of a comfortable and rewarding retirement.
Health care costs are a big concern, but retirees are eligible to enroll in Medicare at age 65. Hospital stays are covered by Part A, and as long as one has paid Medicare taxes while working, no premium is required.
Doctor visits and preventive care are covered by Medicare Part B. In 2025, the monthly premium for these services is $185 (and can be more for higher income earners).
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Medicare Advantage, also known as Part C, is an alternative to Original Medicare coverage that is offered by private companies. This option is growing in popularity and often includes vision, dental and hearing coverage.
Medicare Part D covers the cost of prescription drugsĀ āĀ and prices vary depending on which plan a person selects and the medication a retiree needs.
Dave Ramsey discusses these benefits and costs, and cautions retirees about some realities they may face.
A retired couple is seen walking along a beach. Personal finance coach Dave Ramsey has words of caution for retirees on Medicare and Social Security.
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Dave Ramsey has a warning about Social Security payments
Ramsey says it is a common myth about Social Security that the monthly payments will be financially sufficient for recipients to live on.
“Relying on the government to take care of you in retirement is dumb,” Ramsey wrote. “The problem is, thereās a huge gap between what future retirees think theyāre going to receive from Social Security and what theyāre actually going to get.”
The average monthly Social Security payment is $1,925.46, which is about $23,100 per year. But a recent pollĀ found that 17% of people planning for retirement say those paychecks are the only income they will have.
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The personal finance coach also reminds readers that, unless legislative action is taken, Social Security benefits may be cut in 2033 by more than 20%.
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Ramsey cautions Americans about a common Medicare myth
A widely understood misconception about Medicare is that it will cover all health care needs for a person when they retire.
Ramsey acknowledges that Medicare provides affordable health care coverage for hospital stays, doctor visits and prescription drugs, but does not cover deductibles, copays and long-term care.Ā
“Those costs are on you,” Ramsey wrote. “Thatās the bad news.”
The long-term care piece is vital, because it is often the largest health expense for retirees.
And Ramsey explains his belief that Medicare’s future is unpredictable. Current political conversations include worries that Congress may be forced to raise the eligibility age, add to the cost of premiums and maybe even reduce coverage.
Ramsey recommends people make sure they have long-term care insurance by the time they become 60 years of age and move quickly to increase their retirement savings and investments.
Having a Health Savings Account (HSA) is a strategy Ramsey also endorses.Ā
The investments a person makes in an an HSA grow tax freeĀ ā and the money a retiree takes out to pay medical costs also can be done without taxes.
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